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Income Tax Laws – I

Notes Provided that where the employer has obtained corporate membership of the club and the
facility is enjoyed by the employee or any member of his household, the value of perquisite
shall not include the initial fee paid for acquiring such corporate membership.
Nothing contained in this clause shall apply if such expenditure is incurred wholly and
exclusively for business purposes and the following conditions are fulfilled – complete
details in respect of such expenditure are maintained by the employer which may, inter
alia, include the date of expenditure, the nature of expenditure and its business expediency;
the employer gives a certificate for such expenditure to the effect that the same was
incurred wholly and exclusively for the performance of official duties. Nothing contained
in this clause shall apply for use of health club, sports and similar facilities provided
uniformly to all employees by the employer.

10. Other Fringe Benefits or Amenities: In terms of provisions contained in sub-clause (vi) of
Sub-section (2) of Section 17, the following other fringe benefits or amenities are hereby
prescribed and the value thereof shall be determined in the manner provided thereunder:
(a) Interest free or concessional loan: The value of the benefit to the assessee resulting from
the provision of interest-free or concessional loan made available to the employee
or any member of his household during the relevant previous year by the employer
or any person on his behalf shall be determined as the sum equal to the simple
interest computed at the rate charged by the State Bank of India in respect of loans
for house and conveyance and at the rate charged by the State Bank of India for other
loans on the maximum outstanding monthly balance as reduced by the interest, if
any, actually paid by him or any such member of his household.

However, no value would be charged if such loans are made available for medical
treatment in respect of diseases specified in rule 3A of these rules or where the
amount of loans are petty not exceeding in the aggregate ` 20,000.
Provided that where the benefit relates to the loans made available for medical
treatment referred to above the exemption so provided shall not apply to so much
of the loan as has been reimbursed to the employee under any medical insurance
scheme.

(b) Use of any movable asset: The value of benefit to the employee resulting from the use
by the employee or any member of his household of any movable asset (other than
assets already specified in this rule and other than laptops and computers) belonging
to the employer or hired by him shall be determined @ 10% p.a. of the actual cost of
such asset or the amount of rent or charge paid or payable by the employer, as the
case may be, as reduced by the amount, if any, paid or recovered from the employee
for such use.
(c) Transfer of any movable asset: The value of benefit to the employee arising from the
transfer of any movable asset belonging to the employer directly or indirectly to
the employee or any member of his household shall be determined to the amount
representing the actual cost of such asset to the employer as reduced by the cost of
normal wear and tear calculated at the rate of 10% of such cost for each completed
year during which such asset was put to use by the employer and as further reduced
by the amount, if any, paid or recovered from the employee being the consideration
for such transfer.

Provided that in the case of computers and electronic items, the normal wear and tear
would be calculated at the rate of 50% and in the case of motor cars at the rate of 20% by the
reducing balance method (WDV).

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